Police said Itcho Ito, 61, died of massive blood loss at the Nagasaki University Hospital of Medicine and Dentistry, Kyodo news reported.
Ito, who was seeking a fourth four-year mayoral term in elections Sunday, was hit as he got out of a campaign vehicle at a train station.
The motive for the shooting was not clear but Ito had worked hard for the abolition of nuclear weapons in his city, the target of U.S. atomic bombing in 1945, the report said.
The accused shooter, 59-year-old Tetsuya Shiroo, was arrested at the scene on suspicion of attempted murder. He was reported to be an acting leader of a gang affiliated with Japan's largest organized crime syndicate, Kyodo reported. Police said Shiroo had admitted to the shooting and had previous trouble with the city office over public works bids.
The mayor underwent an emergency operation at the hospital and had remained in serious condition with an attached artificial heart-lung machine. The hospital said a bullet had reached his heart.
Expressing his sorrow, Prime Minister Shinzo Abe said, "I want the investigating authorities to conduct a rigorous probe and get to the truth."
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